What’s Happening to Home Builders?

It's another bad day for housing stocks.

Industry giant DR Horton (DHI) fell 1.4% to $21.30, declining for a third straight trading session since posting disappointing financial results on July 24, the same day the Census Bureau released a weak new home sales report for June. Today's catalyst? More weak housing data and the aftershock from MKM Partners downgrade of the stock from Buy to Neutral amid worries about gross margins.

According to the financial results released last week, D.R. Horton used sales incentives to boost volumes during the previous quarter. So while sales contracts rose 25% in the quarter ended June 30, the gains came at a price. Those incentives drained nearly a full percentage point from the home builder's gross margin.

In Friday's note to investors, MKM analysts Megan McGrath and Ross Sparenblek scolded the company for its "poorly managed earnings call." The pair wrote:

…We think DHI management perhaps suffered from a bit of hubris yesterday, assuming they could “change the conversation” from a focus on gross margins to a focus on return on investment. However, in a quarter when gross margins saw a roughly 200 bps decline, we think this clearly backfired. Although order growth was strong (+25%), investors were not comforted by the margin that needed to be sacrificed to get to that growth level…

In all, D.R. Horton's stock price has fallen 14% since last week's earnings miss. But it isn't the only housing stock suffering today. Data from the National Association of Realtors regarding pending home sales for June failed to live up to expectations, reporting a drop in signed contracts to buy existing home after three months of growth.

Lennar (LEN) fell 2.4% to $37.49 and KB Home (KBH) fell 2% to $17.01. PulteGroup (PHM) sank about 1.3%%.

Housing ETFs including SPDR S&P Homebuilders (XHB) fell 1.56% to $30.27 and iShares U.S. Home Construction ETF (ITB) fell 1.47% to $22.78. PowerShares Dynamic Building & Construction Fund (PKB) lost about 0.75%.

Friday’s Analyst Moves: The Gap Inc., GameStop Corp., Hormel Foods Corp, More (GPS, GME, HRL, More)

Before Friday's opening bell, a number of big name dividend stocks were the subject of analyst moves. Below, we highlight the important analyst commentary for investors.

The Gap Boosted to “Buy”

The Gap Inc. (GPS) has been upgraded from “Neutral” to “Buy” at Janney Montgomery Scott as analysts now consider the company to be the best in its class. GPS has a dividend yield of 2.04%.

BMO Capital Raises PT on GameStop

BMO Capital has increased its price target on GameStop Corp. (GME) to $46, suggesting a 13% upside. The firm has also boosted its estimates on GME as the company continues to gain market share. GME has a dividend yield of 3.26%.

Credit Suisse Raises Estimates on Hormel Foods

Credit Suisse has boosted estimates on Hormel Foods Corp (HRL) through 2015 as the company is seeing higher meat demand. The firm has also raised its price target on HRL to $52. This new price target suggests a 4% increase from the stock’s current price. HRL has a dividend yield of 1.60%.

Barclays Lifts PT on Intuit

Barclays has raised its price target on Intuit Inc. (INTU) to $90, suggesting a 4% upside. Analysts expect the company’s online business to create growth. INTU has a dividend yield of 0.89%.

Credit Suisse Boosts PT on L Brands

Credit Suisse has raised its price target on L Brands Inc (LB

Dividend Preview: 5 Stocks Ready to Pay You More

BALTIMORE (Stockpickr) -- Yesterday's surprise event-driven selloff in stocks was an important reminder not to rely exclusively on capital gains in 2014, especially with stocks sitting on the high end of their historic price range. Put simply, with chances of a meaningful correction on the horizon, dividends still matter for your portfolio this summer.

>>5 Big Stocks to Trade for Gains This Summer

The good news is that now's a better time than ever to be a dividend investor.

As I write, U.S. corporations are paying out record dividends thanks to a record pile of cash on corporate balance sheets -- and the dividend yield of the S&P 500 is hovering in a range higher than we've seen in any sustained period since the mid-1990s. Adjusting for the incredibly low yields on treasuries, dividend payouts are massive right now.

But to find the biggest gains, it's not enough to simply buy names with big payouts today -- you've got to think about what they'll be paying tomorrow too.

So instead of chasing yield, we'll try to step in front of the next round of stock payout hikes.

>>5 Stocks With Big Insider Buying

For our purposes, that "crystal ball" is composed of a few factors: namely a solid balance sheet, low payout ratio and a history of dividend hikes. While those items don't guarantee dividend announcements in the next month or three, they do dramatically increase the odds that management will hike their cash payouts to shareholders.

Without further ado, here's a look at five stocks that could be about to increase their dividend payments in the next quarter.

Verizon Communications

Up first is Verizon Communications (VZ), a $208 billion telecom giant with an equally giant dividend payout. That dividend has added some material performance numbers to VZ's total returns in 2014; without them, this stock is only up 2.4% since the calendar flipped to January. For income-seekers, Verizon's 4.2% yield is one of the biggest on the S&P 500 -- and it looks like it's about to get boosted in the next quarter.

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Verizon Communications the largest local phone and wireless company in the U.S., edging just ahead of top rival AT&T (T) in both categories. Verizon's wired network reaches 25% of the population, and Verizon Wireless boasts 103 million retail subscribers. Scale comes with some serious advantages in the wireless business, and Verizon's bigger-than-thou size means that it can spread network costs across more customers and upsell a larger rolodex of subscribers to margin-boosting services like "triple-play" packages.

Quite frankly, Verizon overpaid to buy the 45% of Verizon Wireless it didn't own from Vodafone (VOD) last year. But the market has already voted that it's happy to take the balance sheet leverage in exchange for full ownership of the nation's largest mobile carrier. It's important to note that the firm's unloading of non-core assets in the last several years unburdened the balance sheet enough to make the big price tag affordable -- and it leaves room for a dividend hike in the next quarter.

Right now, VZ pays a 53-cent quarterly check, but next week's earnings could come with a raise for investors.

Goldman Sachs

Investment bank Goldman Sachs (GS) is another large-cap name that looks ready to give shareholders a raise. Goldman doesn't need much of an introduction. For better or worse, the firm is basically the face of Wall Street. And that reputation gives the firm serious profit power in 2014.

>>5 Breakout Stocks for a Market Near All-Time Highs

Goldman is one of the biggest diversified financial firms in the world. Best known for its investment bank, the firm also operates institutional client services (such as prime brokerage and custody), investment management and retail services. Goldman's reputation alone holds a lot of cachet with many clients, particularly in the investment management side of the business, where wealthy retail clients want the Goldman Sachs name on their statements. In spite of lower deal premiums, increasing M&A and IPO volume in 2014 should help to propel Goldman's investment banking revenue this year.

The decision to convert into a bank holding company during the financial crisis is an important change for income investors: It means that the Fed gets veto approval over proposed dividend hikes for Goldman. It also means that the firm can't expose itself to the same levels of risk that it was permitted to in the past. Ultimately, the increased scrutiny is a good thing, even if it comes at the cost of short-term returns.

Right now, GS pays out a 55-cent quarterly dividend, but a hike looks likely to get rubber stamped by the Fed in the next quarter.

Mondelez International

2014 is driving some solid performance in shares of snack foods company Mondelez International (MDLZ). Since the start of the year, this food stock has climbed 7.6% higher thanks to better-than-expected sales growth numbers. Right now, the firm's 14-cent dividend payout adds up to a 1.47% yield, but the check that Mondelez cuts to investors is likely to get a boost in the next quarter.

>>5 Stocks Under $10 Set to Soar

The Mondelez name started appearing in your local grocery store back in 2012. That's when Kraft Foods Group's (KRFT) former parent spun off the snack and grocery divisions, renaming the former Mondelez. The new firm owns brands such as Oreo, Cadbury, Trident and Ritz. That break-apart decision makes sense for shareholders: Snacks typically carry higher margins, and that will mean higher corporate profits without the dilutive effects of the grocery arm.

Mondelez benefits from mature product lines here at home with relatively high consumer stickiness, but more than 80% of the firm's sales come from outside of North America. Much of that remaining exposure comes from emerging market economies, exactly the mix that investors should be targeting from this stock. While MDLZ took on considerable debt ($18.9 billion today) when it got spun off, but the firm's $2.4 billion cash position helps reduce any risk of liquidity issues.

This stock's short track record has included a big focus on returning value to shareholders. I'm expecting that to continue with a dividend hike next quarter...

Altera

Altera (ALTR) weighs in as the No. 2 player in the programmable logic device market, a subset of chips that can have their circuitry reprogrammed by the manufacturer's clients. PLDs have been growing in demand as the engineering flexibility they give device manufacturers outweighs their cost. Altera's customers include original equipment manufacturers of everything from communications devices to automobile components.

>>Beat the S&P With 5 Stocks Everyone Else Hates

Altera's PLDs open the doors to lower-production product runs, making them perfect for the industrial, communications, and automotive sectors. Since manufacturers don't need to develop application-specific integrated circuits, which have large fixed-costs and cannot be reconfigured. A production deal with Intel (INTC) gives Altera access to the most advanced manufacturing facilities in the world, enabling the firm to compete with cutting edge purpose-built chips.

From a financial standpoint, Altera is in stellar shape. The firm carries $3.26 billion in net cash and investments on its balance sheet, enough to cover more than 30% of ALTR's total market capitalization today. That's a huge amount of risk reduction, and investors should expect management to deploy some of that dry powder to hike its 1.74% dividend yield.

Right now, Altera pays out a 15-cent quarterly check to investors, but next week's earnings release could come with a raise.

Republic Services

Calling Republic Services (RSG) a huge garbage stock isn't a detractor -- it's a compliment. That's because the $13 billion name is the second-largest provider of waste management services in the U.S. Republic operates more than 338 individual trash collection companies, with nearly 200 transfer stations, 70 recycling centers and 190 landfills in its network.

Republic's business is largely recession-resistant. Because individuals and companies need to dispose of trash regardless of economic conditions, customer stickiness is high during all phases of the economic cycle. Likewise, because of RSG's large scale, it's able to vie for large national accounts that regional players can't bid for. While competition is tough with larger peer Waste Management (WM), the market is big enough for both firms to see growth in the next few years.

While the waste disposal business is capital intense (a single new garbage truck can cost more than $250,000 for example), the firm's operations throw off plenty of cash to cover interest payments and dividend hikes. Look for a boost to RSG's 26-cent dividend payout in the next quarter. Right now, Republic's dividend adds up to a 2.82% yield.

To see these dividend plays in action, check out the at Dividend Stocks for the Week portfolio on Stockpickr. 



-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>4 Stocks Spiking on Big Volume

>>4 Under-$10 Stocks to Trade for Breakouts

>>5 Rocket Stocks to Buy for Summer Gains

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

The 'Bill Ackman IPO': Hedge fund going public

  Explaining Herbalife's alleged 'pyramid scheme' NEW YORK (CNNMoney) Billionaire Bill Ackman is akin to the Richard Sherman of Wall Street -- opinionated, driven and mostly successful. Now Ackman wants average investors to share in his spoils.

In a letter to investors Wednesday, Ackman plans to take one of his funds -- Pershing Square Holdings -- public later this year.

That means regular people across America could get a stake in his fund that has only been open to the wealthy and connected.

His reasoning: to give even more sway to activist investors like himself. Ackman's investing strategy is to make large bets for or against certain stocks and then lobby aggressively for change the management, corporate structure, or overall business to achieve the returns that he wants.

With greater financial firepower, Ackman argues, activists will be able to go after more large companies that aren't operating in the best interest of shareholders.

"Prior to the arrival of shareholder activism, when shareholders were disappointed with management, they had no choice but to sell because they had little if any recourse," Ackman declared in the investor letter. "Today, they call a shareholder activist."

But Ackman is known for some high profile flops.

Most famously, he disclosed a $1 billion bet against Herbalife, the controversial maker of diet shakes and supplements, based on the belief that the company is a pyramid scheme. Despite his best efforts to openly campaign against the company, the stock has soared.

He also took a beating on an investment in troubled retailer J.C. Penney in recent years.

Still, Ackman's track record is impressive. His Pershing Square Holdings fund returned 32% in the first half of 2014, compared to a 7.1% gain for the S&P 500.

At the end of the day, investing in a publicly traded Pershing Square is essentially a wager on Ackman himself.

U.S. Stocks Reverse; Cheetah Mobile Back In Google App Store Rankings

Related BZSUM U.S. Stocks Turn Red; 21st Century Fox Shares Surge On Upbeat Results Markets Open Higher; Brinker Profit Misses Estimates

Wrapping up the Thursday session, the Dow traded down 0.35 percent to 16,385.62 while the NASDAQ declined 0.22 percent to 4,345.22. The S&P also fell, dropping 0.39 percent to 1,912.69.

Leading and Lagging Sectors

Utilities shares surged around 0.57 percent in today’s trading. Meanwhile, top gainers in the sector included Empresa Distribuidora y Comercializadora Norte S.A. (NYSE: EDN), up 1.86 percent, and PNM Resources (NYSE: PNM), up 1.81 percent.

In trading on Thursday, healthcare shares were relative laggards, down on the day by about 0.62 percent. Meanwhile, top decliners in the sector included Thoratec (NASDAQ: THOR), down 30 percent, and PhotoMedex (NASDAQ: PHMD), off 15.11 percent.

Top Headline

Cheetah Mobile (NASDAQ: CMCM) rose 11 percent on news the company had its app relisted in the Google App Store ranking system.  The release was published in a Chinese publication.

Brinker International (NYSE: EAT) reported a drop in its fourth-quarter profit. However, the company's revenue topped analysts' estimates.

The Dallas, Texas-based company posted a quarterly profit of $28.8 million, or $0.43 per share, versus a year-ago profit of $46.4 million, or $0.64 per share. Excluding items, its earnings climbed 10.4% to $0.85 per share from $0.77 per share.

Its total revenue gained 3.9% to $758.7 million. However, analysts were expecting earnings of $0.86 per share on revenue of $749.7 million.

Equities Trading UP

Lehigh Gas Partners LP (NYSE: LGP) shares shot up 25.80 percent to $32.69 after CST Brands (NYSE: CST) announced its plans to acquire Lehigh Gas GP LLC, the general partner of Lehigh Gas Partners LP. Lehigh Gas Partners also reported its financial results for the second quarter.

Shares of Twenty-First Century Fox (NASDAQ: FOXA) got a boost, shooting up 4.86 percent to $33.90 after the company reported upbeat fourth-quarter results. Cowen & Company upgraded 21st Century Fox from Underperform to Market Perform and raised the price target from $29.00 to $35.00.

Stratasys (NASDAQ: SSYS) shares were also up, gaining 15.15 percent to $113.90 after the company reported better-than-expected quarterly results and lifted its forecast.

Equities Trading DOWN

Shares of Thoratec (NASDAQ: THOR) were down 30.18 percent to $22.72 after the company reported downbeat second-quarter sales and issued a disappointing 2014 earnings outlook.

Atmel (NASDAQ: ATML) shares tumbled 6.57 percent to $8.03 after the company reported in-line Q2 earnings. Bank of America downgraded Atmel from Buy to Neutral.

Melco Crown Entertainment (NASDAQ: MPEL) was down, falling 3.25 percent to $29.04 after the company reported downbeat quarterly results.

Commodities

In commodity news, oil traded up 0.39 percent to $97.30, while gold traded up 0.50 percent to $1,314.80.

Silver traded down 0.24 percent Thursday to $19.98, while copper rose 0.27 percent to $3.17.

Eurozone

European shares were lower today. The eurozone’s STOXX 600 fell 0.71 percent, the Spanish IBEX Index dropped 1.64 percent, while Italy’s FTSE MIB Index tumbled 1.94 percent. Meanwhile, the German DAX fell 1 percent and the French CAC 40 declined 1.36 percent while UK shares dipped 0.65 percent.

Economics

US initial jobless claims declined 14,000 to 289,000 in the week ended August 2. However, economists were expecting claims to reach 304,000 in the week.

Natural-gas supplies climbed 82 billion cubic feet in the week ended August 4, the Energy Information Administration reported. However, analysts were estimating a rise of 81 bcf to 85 bcf.

Data on consumer credit for June will be released at 3:00 p.m. ET.

Data on money supply will be released at 4:30 p.m. ET.

Posted-In: Earnings News Guidance Eurozone Futures Commodities M&A Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  Most Popular Morgan Stanley Dissects FireEye's 'Complex' Second Quarter Results Exclusive: Tibco CEO Vivek Ranadive Talks Valuation; Takeout Rumor Swirling Tesla Gets More Love From Morgan Stanley Macau Casino Stocks Down On Weaker Revenue Outlook Morgan Stanley Defends Walgreen Despite Inversion Decision Earnings Scheduled For August 6, 2014 Related Articles (ATML + BZSUM) Atmel Matches Q2 Earnings Estimates, Revenues Rise Y/Y S&P 500 Falls To Two-Month Low, Dow Drifts Further Away From The 17,000 Mark U.S. Stocks Reverse; Cheetah Mobile Back In Google App Store Rankings U.S. Stocks Turn Red; 21st Century Fox Shares Surge On Upbeat Results

Time Warner Shareholders Get Outfoxed

Popular Posts: 22 New Stocks to Watch – Mobileye, Synchrony Financial & MoreSpaceX IPO Rumors – Real Stock Launch or Science Fiction?How Venture Capital Revolutionized U.S. Businesses Recent Posts: Time Warner Shareholders Get Outfoxed Sirius XM – Investors Should Start to Tune Into SIRI Stock TripAdvisor Investors Get Queasy (TRIP) View All Posts Time Warner Shareholders Get Outfoxed

Playing M&A can be dicey, and investors got a harsh lesson in this today, as seen with the 11% drop in Time Warner (TWX) stock.

If anything, Wall Street thought that 21st Century Fox's (FOXA) Rupert Murdoch was going to pump up his bid for the media operator, say to $90 or $95 per share (the initial offer was for $85 per share or roughly $80 billion). But instead he suddenly walked away from the deal, and now it looks like he may never come back.

Yet even with all the drama, there may still be a good opportunity with TWX stock.

Now it's true that a combo of Fox and TWX would have been powerful. After all, there was a potential to create a true rival to Disney's (DIS) ESPN. Fox has lucrative contracts with the NFL, MLB and Nascar while TWX has deals with the NBA, college basketball and PGA.

For the most part, major advertisers continue to pay substantial amounts for live sports events because there usually is little commercial-skipping. But there are also opportunities for better engagement, such as with the "second screen" phenomena of Twitter (TWTR) and Facebook (FB).

But perhaps the biggest play with a TWX-Fox merger was the idea of building a Netflix (NFLX) killer. At the heart of this would be Time Warner's HBO, which has more than 28 million paid subscribers and has a long history of creating standout content like Game of Thrones and True Detective.

A merger would also provide some leverage with cable operators, which have been focused on dealmaking. Two recent examples of this include Comcast's (CMCSA) $45 billion deal for Time Warner Cable (TWC) and AT&T's (T) $48.5 bid for DirecTV (DTV). But there is also the rising power of new distribution platforms like Netflix, Amazon (AMZN) Prime and perhaps even Apple (AAPL).

So why on Earth did TWX say "no" to the deal? Perhaps part of the reason is the inevitable complications of getting regulatory authority. And even if a deal got approval, the process would have been a prolonged distraction.

But Time Warner also has a bright future as an independent company. Keep in mind that the company has been doing the heavy lifting of streamlining operations. Just look at the spinoffs of assets like AOL (AOL), Time Warner Cable and Time (TIME). At the same time, TWX has been focused on share buybacks and dividend increases. The current yield is a decent 1.9%.

And yes, TWX continues to have a winning hand with its movie studio. Some of the recent hit films include Gravity (which won multiple Oscars) The LEGO Movie and The Hobbit: Desolation of Smaug. Granted, the company still has work to do as TNT and CNN continue to lag. But TWX is certainly making the necessary investments to turn things around.

In fact, TWX reported its second-quarter earnings today and the results were solid. Profits grew by 10% to $850 million, or 95 cents per share (98 cents per share on an adjusted basis), while revenues increased by 2.7% to $6.79 billion. A key driver continued to be HBO, with revenues up 17%. The division got a nice boost from licensing content to Amazon.

So at 16 times earnings, TWX is also trading at a reasonable valuation. Consider that FOXA is at 24X and CBS (CBS) trades at 18X. Besides, Time Warnerbelieves that its earnings will grow at a low-to-mid-teen rate for the next three to four years. In other words, the recent plunge really does look like a nice entry point for the stock.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.